Commentary: A return to Phase 2 could be a momentary setback to Singapore’s economic recovery
SINGAPORE: The Singapore economic system faces a possible momentary setback in its recovery.
Singapore will shift back into Phase 2 of the safe distancing measures from Saturday (May 8) after a rise in COVID-19 community cases in recent weeks.
Social gatherings must shrink to five from the viii allowed in Phase 3. Gyms will be shut until May thirty. Employers must ensure no more than 50 per cent of employees are at the workplace at whatever time, down from the 75 per cent previously immune.
The first quarter of 2022 gave us hope for a V-shaped recovery, with the Singapore economy returning to positive growth for the first fourth dimension after a gruelling year. Official rhetoric suggested the 4 per cent to 6 per cent growth forecast is probable to be exceeded.
A quarterly survey by the Monetary Say-so of Singapore (MAS) of 24 economists and analysts in March estimated the Singapore economy to expand at between 5 per cent and 6.9 per cent.
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TEMPORARY SETBACK TO RECOVERY
Still, it is too early to predict if the second half of the twelvemonth will be derailed. Given the better-than-expected growth in the offset quarter of 2021, it is still plausible that full-year growth volition come in around or slightly higher than 6 per cent for the year – provided the customs cases in Singapore don't necessitate a prolonged stay in Phase 2 or worse.
That said, the touch of the latest measures may impact different sectors to varying magnitudes, with F&B and the fettle industries likely to run across their climb to recovery even more strenuous. Much will depend on how businesses and workers respond, and if they can apply lessons learnt over the by yr to go over this bump and others that might materialise to manage the impact.
The good news is the productivity hitting should be pocket-size. By now, many Singaporean workers are familiar with a hybrid piece of work model, comfy with working from both dwelling and office.
Although many employees volition have to become back to working from domicile with the new restrictions, it's been barely a calendar month later the percent of people allowed to piece of work in office was raised to 75 per cent on April 5.
In fact, this may give yet another impetus for employers to provide more flexible workspace arrangements in the medium-term, given the uncertainty and prevalence of new strains of the virus. But commercial landlords and REITS may worry about near-term occupancy prospects.
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SOME SECTORS WORSE Hit
Retail shops and dining places, especially those in the CBD, will lament the policy reversal the virtually. Those who had already made plans to celebrate Mother's Day over the weekend take tempered their festivities or returned to virtual celebrations or scale downwards.
Restaurants will now have to rearrange their tables to seat a maximum of v instead of eight people. Over again, the dorsum-and-forth transition betwixt phases may call for a high degree of flexibility in tweaking restaurant layouts, then modular gear up-ups may work better as long as COVID-nineteen remains prevalent, while F&B outlets may find information technology more prudent to keep manpower variable.
For gym-goers similar me, going back to virtual workouts and jogging in the park brings back some uncomfortable memories of the circuit breaker. For a more than sustainable model, fettle offerings may have to look beyond on-site and hybrid offerings and seriously consider more than off-site, customised and flexible options.
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TRAVEL AND LIFESTYLE PLANS AFFECTED
Travel might meet the biggest hitting. The extension of Stay-Home-Detect (SHN) for travellers from college-risk regions and countries from 14 to 21 days may deter more arrivals in the near term.
The Singapore-Hong Kong travel bubble may also exist affected, to the thwarting of those who had snapped up flight tickets for travel from May 26, although there are no official announcements yet if the special travel arrangements between both destinations will one time again be put on hold.
The key incertitude is whether the current vaccines would exist effective against the more virulent and new COVID-19 strains and if herd immunity remains something of a pipe dream for now.
(What do new COVID-xix variants hateful for Singapore? Infectious disease and public health experts counterbalance in on CNA's Heart of the Matter:)
The issue on the MICE industry is fuzzy. Event organisers, performers and cinema players will likewise have to do greater circumspection going ahead.
We are likewise equally yet unclear how the Shangri-La Dialogue or the Earth Economic Forum meeting, due to take identify later on this year, would be affected. Mass participation sports events would exist suspended, and so fans of Formula i have to await longer to find out if the grand prix is coming to town.
Attractions, museums and tours volition likewise accept their capacity capped, which imply a longer runway to recovery. Weddings with more than 50 guests would too require pre-outcome testing (PET), much to the dismay of hotels, food caterers and, of course, the guests themselves.
PROPERTY SECTOR MAY Be RESILIENT
I exception could exist the domestic property market which could even so testify to be allowed to other economical trends.
Individual property has risen in recent quarters equally local need remains resilient in an environment of ample liquidity and low involvement rates. Disallowment any hints of cooling measures if prices get too carried away, the return to Phase 2 is unlikely to sink enthusiasm for the property market at this juncture.
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The future of work has fundamentally inverse amid the pandemic. This will have significant implications on how the Singapore economy trains, upskills and retains talent.
How ane measures labour productivity, performance assessment and renumeration more than carefully in a hybrid piece of work model too bears consideration and is likely to take a lasting impact on how Singapore companies can move equally the state of war against COVID-nineteen continues.
Are cooling measures on the cards subsequently iv quarters of price increases in the residential belongings market place? CEO Propnex Ismail Gafoor and NUS Institute of Real Estate Studies Dr Lee Nai Jia requite on their take on CNA'due south Heart of the Thing podcast:
Selena Ling is Caput of Treasury Inquiry and Strategy at OCBC Bank.
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